7 Reasons Budget Meetings Aren't Strategic

Just by the nature of the subject and process, budget meetings aren’t typically strategic. These 10 reasons all contribute to making the process non-strategic and sometimes even counter-intuitive to being directly tied to the business strategy:

1. Perhaps one of the biggest issues is that budget meetings oftentimes are not integrated with the processes of strategic planning and business strategy. To add to the problem, meetings that are focused primarily on budget-setting solve for numbers and do not solve for business results. Also the length of budget meetings isn’t matched to the strategic complexity or importance of the area.

2. The meetings can be adversarial, as if the people inside the company are trying to rip off the company by requesting money to run it. And on the other side of the table, general managers and non-financial executives are placed in unfamiliar and poorly-performed accounting roles. To make matters worse, Accounting and Finance departments can act as if they control the business and are integral to generating revenue and profit.

3. The focus of the conversations oftentimes are only on numbers, without any stories of success and aspirations for what the dollars actually are expected to do.

4. Budget meetings oftentimes are handled out of context of any strategy, with players in the meetings looking at the business by department instead of by initiative.

5. Such meetings prioritize overly precise discussions about inconsequential aspects of the business.

6. Budget meetings can be awkward and challenging to prepare for to ensure they are as productive as possible. And since they only happen once a year, the formats and discussions are unfamiliar.

7. Preparing for budget meetings can create an "organizational drag" on getting things done to drive the business forward.

Because of these factors, business and department leaders often focus on escaping budget meetings with some semblance of a budget that makes sense. This behavior obscures looking at their areas and the entire organization strategically, comprehensively, and with a smart investment perspective.

So what can you do to address these issues?
Most importantly, ensure that the strategic planning process is fully integrated with the budget-setting process. While you may want to separate the processes of setting business goals and objectives for 2018 from setting the budget, at some point in the process you'll need to tie budget figures directly to the business goals and priorities. 

In addition, use a "weighting system" to identify the most important business goals you have - and then develop budgets that reflect the highest priorities with the dollars invested.

Lastly, when budgeting try to incorporate as much line items and detail as possible to get correctly into "the ballpark" of all the initiatives you're budgeting for. While you may want and need to have flexibility in your marketing and sales execution throughout the year, initial planning to help formulate budget figures can be extremely helpful in establishing your budget parameters. Having such detail also can be beneficial in getting buy-in from the top. 

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